FinTech commits $250 million to fund small business and compete with “big four”

Business lender Moula has announced an additional $250 million would be made available for funding Australia’s small businesses as it vies to compete directly with traditional banking institutions.

Together with the funding commitment, the lender also revealed it would offer pricing starting from 15.95 per cent (APR), a move unprecedented in the online unsecured business loan market.

In addition, Moula is extending its loan terms from 24 months to 36 months and increasing the amount that can be borrowed from $250,000 to $500,000. These updates aim to provide business owners more flexibility when it comes to accessing capital, and less reason to rely on banks.

Commenting on the announcement, Moula CEO, Aris Allegos said, “Injecting a quarter-of-a-billion dollars into Australia’s businesses, and making our financing terms more flexible will ensure that hard-working business owners aren’t locked out of accessing funding, and are able to seize growth opportunities with confidence.

“Until now, online business lenders have competed with banks on speed, ease of application and customer service. However, competition based on pricing has been largely absent. With our new pricing and ongoing commitment to transparency, we’re now able to provide business owners with another option which is not only faster and easier than a bank, but also more affordable.”

Allegos stressed that transparency is key, with no hidden fees or penalties should a customer choose to pay early.

The funding injection comes at a time when banks are tightening much-needed funds for business. The Reserve Bank of Australia recently found that more than one-fifth of businesses reported that they found it difficult to access finance. According to Digital Finance Analytics’ 2017 SME Survey, unsecured business loan applicants now face a 74 per cent rejection rate, up from the previous year, where businesses had a 67 per cent likelihood of being rejected by traditional lenders.

Business owner Bek Mcmillan, who owns retail store Gourmet Living in Templestowe, Victoria, stocking regional produce, used Moula to fund extra inventory.

“My experience with Moula was really simple, it was a really quick process. I had the funds within 48 hours. After starting the year with a little bit of a cashflow gap, I really needed some funds to increase the inventory so I could start 2019 with a store full of amazing stock,” Ms Mcmillan said.

Allegos explained that Moula’s announcement follows the recommendations handed down from the Hayne Royal Commission.

“A banking system focused on customer outcomes and characterised by transparency is critical in servicing the needs of the consumer. Post Hayne, we’ll start to see better pricing terms and product experiences, which is great news for business owners and consumers,” he said.

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